The Biggest Reason Why I Admire and Respect Hans-Hermann Hoppe

Besides making enormous contributions to sociology, philosophy, economics, history, and libertarianism, here’s the biggest reason why I admire and respect Hans-Hermann Hoppe:

This is an excerpt from  Llewellyn H. Rockwell, Jr.‘s Forward to Hoppe’s book, A Short History of Man: Progress and Decline:

Hans-Hermann Hoppe is one of the most remarkable libertarian scholars of our time. He began as a prize student of Jürgen Habermas, the famous German philosopher and social theorist. Habermas was, and remains to this day, a committed Marxist. He is the leader of the notorious Frankfurt school.

Habermas was very impressed with Hans, and, under the patronage of this eminent Marxist, Hans had every reason to expect a stellar academic career in his native Germany. A problem soon arose, though, one which has had happy results for all those who love liberty. Hans soon came to realize that the leftism and socialism he had grown up with was intellectually barren and morally bankrupt. He discovered on his own the great works of Ludwig von Mises and Murray N. Rothbard.

Austrian economics and Murray’s anarchism were not what Habermas had in mind. By becoming a libertarian, Hans effectively ended his chances for a chair at a major German university, even though his intellectual accomplishments easily qualified him for one. Like Murray, though, Hans is a scholar of complete intellectual integrity. He would not surrender what he had come to realize was the truth, whatever the cost to his own career.

Hans decided to come to United States in order to study with Murray, who was then teaching in New York. When I met him, I was struck by Hans’s firm commitment to Rothbardian principles and his outstanding intellectual ability. Murray, of course, immediately grasped Hans’s potential. When Murray was named to an endowed chair in economics at the University of Nevada, Las Vegas, he worked to get Hans a position in the economics department as well. Together, the two of them made UNLV a major center for the study of Austrian economics; and they did so in the face of much opposition from some of their departmental colleagues.

Murray was especially intrigued by one of Hans’s main arguments. Hans’s teacher Habermas pioneered an approach to ethics based on the conditions for engaging in rational argument. In a way that Habermas would hardly approve, Hans turned Habermas’s ethics on its head. Instead of support for socialism, argumentation ethics as Hans explained it provided powerful support for self-ownership and private property.

In short, Hoppe’s commitment to truth, intellectual honesty, and logical consistency lost him a prestigious position at a German university. By turning away from Habermas’s Marxism and embracing Rothbard’s libertarianism Hoppe embodies Mises’s life motto:

Tu ne cede malis, sed contra audentior ito. (Do not give in to evil but proceed ever more boldly against it.)

 

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Video: Jeffrey M. Herbener on Subjective Value and Market Prices

Jeffrey M. Herbener from the Mises Institute talks about the role of subjective value in human action, the relationship between the subjective valuations of individuals and market prices, and the role of prices in appraisement.

 

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Understanding Subjective Value

 

Understanding subjective value is extremely important to having a good foundation of economic knowledge.

Classical economists once held the belief that prices were based on the cost of materials going into a good and the amount of labor going into a good. Based on their ideas of value, classical economists couldn’t understand why bread (being very useful for survival) would have a lower value than diamonds (not being very useful for survival). This error is based on an ignorance of human action. In the words of Murray Rothbard,

“The critical flaw was that classical economics had attempted to analyze the economy in terms of ‘classes’ rather than the actions of individuals. As a result, the classical economists could not find the correct explanation of the underlying forces determining the values and relative prices of goods and services; nor could they analyze the actions of consumers, the crucial determinants of the activities of producers in the economy.”

 

What really gives something its value is the fact that an individual will pay for the good for a certain price. On a sunny day, you might not value an umbrella more than a few dollars. However, if it starts raining, your preferences will likely change and you will value an umbrella more now. You may be willing to pay much more for an umbrella on a rainy day than you would pay for an umbrella on a sunny day. This is because value is based on the preferences of individuals.

Let’s say A has a pen and B has $2. If A and B decide to trade, what conclusions can we draw? If A trades a pen for $2, it must be that A values the $2 more than the pen. Consequentially, B must value the pen more than the $2. So, A and B are both profiting by this exchange. This profit is only possible because value is subjective.

If the pen was worth the same to everyone and the $2 was worth the same to everyone, there would be no reason for the exchange to take place. If the pen and $2 are both valued at $2, then A and B would be indifferent toward trading. It is because value is based on the subjective preferences of individuals that mutually beneficial exchanges can occur.



Thanks to Carl Menger and his successor Eugen von Böhm-Bawerk, according to Rothbard,

“…it became clear to the Austrians that no productive activity, whether of labor or of any productive factors, could confer value upon goods or services. Value consisted in the subjective valuations of the individual consumers. In short, I could spend thirty years of labor time and other resources working on the perfection of a giant steam-powered tricycle. If, however, on offering this product no consumers can be found to purchase this tricycle, it is economically valueless, regardless of the misdirected effort that I had expended upon it. Value is consumer valuations, and the relative prices of goods and services are determined by the extent and intensity of consumer valuations and desires for these products.”

PDF Version

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Tragedy of the Commons

The “tragedy of the commons” illustrates the fundamental differences between the effects of public and private property ownership.

“If land is not owned by anybody, although legal formalism may call it public property, it is utilized without any regard to the disadvantages resulting. Those who are in a position to appropriate to themselves the returns — lumber and game of the forests, fish of the water areas, and mineral deposits of the subsoil — do not bother about the later effects of their mode of exploitation. For them the erosion of the soil, the depletion of the exhaustible resources and other impairments of the future utilization are external costs not entering into their calculation of input and output. They cut down the trees without any regard for fresh shoots or reforestation. In hunting and fishing they do not shrink from methods preventing the repopulation of the hunting and fishing grounds.” – Ludwig Von Mises (Human Action)

The “tragedy of the commons” is the lack of incentive for individuals to maintain the quality, quantity, standard, etc., of a publicly owned resource. Something that is publicly owned is not owned by a single individual and everyone has equal access to it. This is opposed to private ownership where a single individual has the right to exclusive access. There is no reason for users of a publicly owned resource to be careful about how they use that resource because there is no guarantee that the resource won’t be destroyed or used up by the rest of the public. No one has any interest in maintaining a resource they cannot have exclusive access to.

 

For example, if you go to the movies with a date and split a soda, it is commonly owned between the two of you. If you each buy your own soda, your sodas are your own private property. If you and your date are extremely thirsty, how will these two scenarios play out? If you split one soda between two thirsty people, they will drink it without much regard for how much they are each consuming. Because you can’t limit your date’s consumption of the common resource, it is in your interest to consume as much as you can before your date consumes a majority of the resource.

If you each get your own sodas, you each have exclusive access to your own sodas and can consume in a more appropriate fashion rather than trying to drink it all before your date does. In a world of scarcity, resources to be conserved are best owned privately rather than publicly. This way, there is a sole owner who is responsible for and has an interest in maintaining the standard of that resource.

 

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